10 key questions to ask before choosing a cottage insurance policy

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Your cottage is your home away from home — a sanctuary to escape from everyday stresses. It’s a place to decompress, reconnect with the land and create a lifetime of wonderful memories with friends and family.

But for some reason, when it comes to adequate cottage insurance, a lot of cottagers drop the ball. Perhaps you can’t imagine the possibility of catastrophe hitting your place of tranquility. Unfortunately, catastrophe doesn’t discriminate, but there are things you can do to give you peace of mind and prevent costly repairs. Shop around and get the right coverage for you.

To help you on your journey, here are 10 key questions to ask a potential insurer before purchasing a cottage insurance policy.

1) Is there a different policy requirement for seasonal, year-round use? What are the limitations of seasonal coverage?

There is typically a higher risk — and thus cost — associated with seasonal use. Damage can often become worse when no one is around to provide upkeep and make timely repairs. In some cases, cottage insurance is provided as a Named Perils policy, which provides coverage for only specific perils named in your policy, such as fire, explosion, or smoke damage.  Some insurers offer comprehensive seasonal coverage for cottages. In order to figure out what’s best for you, shop around before purchasing insurance for your cottage.  Ask specific questions. Find out what is and isn’t covered and determine what’s most relevant to your situation

2) Do I have to have my home insurance with you (add-on or seasonal) in order to get cottage insurance?

Many companies require that you have home insurance with them before they will insure your cottage. There are exceptions and some companies actually specialize in cottage insurance, so you should speak to your insurance provider before you proceed, and  shop around if your situation allows it.  

3) If my cottage is on an island or in a remote location, does my policy cover the increased costs of debris removal, material delivery, etc. due to fire loss?

An island cottage can be a tricky proposition. You may have difficulty finding an insurer for your island retreat since these sorts of cottages are rare.  Building a cottage in a hard to access area is costly since transporting materials and labour out to the location will inflate costs.  If you’re thinking about purchasing an island cottage (or already own one) and are looking for insurance, be sure to let your potential insurance provider know the cottage is on an island.  This is a specialty area of insurance and you want to know you’re properly protected.

4) Am I covered if I rent out my cottage under the standard policy?

Before you make the decision to rent your cottage out for periods of the summer or winter, check with your insurance provider to see if renting is allowed under your policy. Many policies do not allow for renting and doing so under a policy that doesn’t allow renting could have unfortunate consequences in the event of a claim that results from this activity.   Some insurance providers do allow a certain rental period, but the length of this period varies. If you plan to rent out your cottage, check with your insurer to be sure your policy allows it, and what your allowable period is.

5) Does my policy include the Replacement Cost (cost of repair or replacing with something new, without any deduction for depreciation) on the building or the Actual Cash Value (value of the old buildings)?

This question is an important one, and it will determine how much you will be out of pocket if you need to rebuild or repair your cottage as a result of a fire or other damage. You may have paid $75,000 for your cottage 20 years ago, but you can be sure that it will cost much more today if you need to rebuild. Ideally you want Replacement Cost. Take into account the size of your cottage, exterior construction materials, flooring, and the type of cottage you own.  Your insurer will be looking at this information to determine your cottage’s value.

6) Are there any specific requirements I need to be aware of in order to ensure my policy remains valid?

You will be heartbroken if you find your policy is declared void because you failed to make regular visits to your cottage throughout the year, simply because you didn’t notice a policy clause requiring you to schedule regular visits to your seasonal cottage throughout the year. Insurance policies can be confusing, so ask about any requirements specific to your situation. Follow through with them. Keep records if necessary, and advise your agent of any material changes to your cottage.

7) Are my outbuildings, such as a dock, garage or boathouse covered?

Some insurance packages include a limited amount of coverage for any outbuildings. Make sure to find out what is included. Purchase any additional coverage that you need to ensure that you are adequately protected. These are often covered under the Detached Private Structures portion of the policy. Also ask about any exclusions to this coverage, such as damage due to things like ice build-up.

8) Are my boats and other “toys” covered under my cottage policy?

Make no assumptions. You want to protect all your assets. Find out what is covered, if there are limitations, if you require additional coverage and any possible exclusions. Ask about deductibles, not only in this case, but for all items you have under your policy or plan to enjoy at your cottage.   Contact your insurer if you’re thinking about doing major work on your cottage, or making a major purchase (like a boat) for the property.  In some cases, changes to your policy can result in savings through bundling of items or changes that make your property safer. You may need to purchase additional protection for some of your motorized toys and other items you keep at the cottage.  Just remember, every situation is different, and policies vary, so don’t be afraid to ask your insurance provider.   

9) What is contents coverage? What are the limitations and how would content claims be settled?

Some cottage property policies will automatically include contents up to a certain limit. This coverage applies to contents permanently kept at the cottage (anything you bring back and forth, such as clothing, will be covered by your primary home insurance policy). Additional coverage may be purchased if needed. Remember to ask how claims would be settled. See Replacement Cost mentioned earlier.

10) Do I need third party liability, and how much should I get?

Yes, always get third-party liability coverage. This is to protect yourself in case someone gets hurt on your property or you cause damage to neighbouring properties.

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